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Sunday, 11 October 15
TANKER SHIPPING: MORE OPTIMISM IN SIGHT FOR TANKERS IN THE WINTER SEASON - BIMCO
 Demand:
2015 has been the year of the tanker. The fundamental improvements with slow supply-side growth for some years coupled with low oil prices from mid-2014 created strength on both sides. Freight rates started to take off in October 2014 for all types and sizes. The combination of an early start to the fourth-quarter seasonal strength heading into winter and the fact that the oil prices continued to slide became a catalyst.
Throughout 2015, the global refinery throughput has been on a rise. The normal seasonal lower throughput in the first half of the year with widespread maintenance did not occur. Owing to rising and already elevated refinery margins from East to West, refineries simply wanted all the crude oil they could get. This development still provides strong demand and solid freight rates for the tanker industry. In India, we saw a record of 4.74 million barrels per day (mb/d) of crude throughput in June, marking a truly global trend, whereas Middle Eastern refineries also hit a record throughput because of increased runs in Saudi Arabia.
October is traditionally another month of lower throughput as refineries get ready for the winter season when crude runs normally peak. Moreover, the American “Labor Day” on 7 September marks the end of the US driving season which started on Memorial Day, 25 May. This means that the recent 10mb/d production of gasoline will come down.
Some of that weakness may already have caused freight rates to come down sharply, in combination with the global financial uncertainties originating from China. Very large crude Carriers (VLCCs), Suezmax and Aframax have seen freight rates cut in two since mid-June, while Handysize has been the one to drop the most among oil product tankers.
In a rush of excitement, it’s easily forgotten that such high refinery crude runs can only go on for so long, if end consumption supports it. End consumption has supported it some of the way but not all the way. Swollen stocks of crude oil and oil products are now seen everywhere. Preliminary OECD total industry stock change in second-quarter was 1.1mb/d. All stocks but gasoline increased, US crude oil stocks too. In comparison global oil demand dropped by 0.1mb/d over the same period of time and is expected to see an increase of 1.6mb/d to be consumed for the full year over 2014.
Supply:
Contrary to what happens too often, the strong freight markets for oil product tankers have not resulted in a knee-jerk run to the shipyard to order a massive amount of new ships. This stands in opposition to the crude oil tanker orders seen in 2015, as if the lid has come off finally after several years of resisting the temptation.
By end-August 2015, 56 product tankers with a total capacity of 4.8 million DWT, predominantly LR2 (20) and LR1 (21), have been ordered and will be delivered in 2016-17. They are aiming to get a share of the market for longer-haul trades out of Middle East refineries, predominantly into the Western markets. This ordering trend has been on for two years now.
Among the crude oil tanker segments, we have already seen more orders for both Aframax and VLCCs than we did in the whole of 2014. Aframax in particular has been popular with investors this year; after six years with one order a month on average, 2015 has seen 29 new contracts in the first eight months. For the VLCCs, the orders with delivery in particular 2017 (21) and in 2018 (14) have been favoured by investors. In 2015, 50 new VLCC contracts in total have been signed.
One of the launchers which has lifted the freight rates into orbit is two years of very slow fleet growth. Today the fleet holds 648 VLCCs, whereas 628 VLCCs were active by mid-2013. That’s a growth of just 3% in 26 months. Looking forward into the future inflow of crude oil tankers, we can see the delivery pace is picking up and the demolition potential is vanishing with just 14 VLCCs being more than 20 years old and another 16 getting inside the window of the fourth special survey in 2016.
On order for a scheduled delivery during the next 16 months are 71 VLCCs. This means a double-paced inflow as it has taken 34 months for the latest 71 VLCCs to be put into active service.
The change in supply-side conditions will slowly tighten the freight market, and as we look into 2016, the tide could turn fundamentally as a fleet growth of 4.4% is likely to outstrip demand growth. As the coming two years are now “full” in terms of remaining in control of supply-side growth, any additional crude oil tanker orders should be placed for 2018 delivery.
BIMCO forecasts the present and next year supply growth for oil product tankers to be at 5.4% and 5.7% respectively, meaning two “full” years too for that segment.
Outlook:
Looking forward, the winter markets are expected to soften, as the eventual lower refinery crude oil throughput when no more stocks can be filled and margins begin to crumble as demand slips. Until then BIMCO expects earnings for both crude oil and oil product tankers to remain strong. Our expectations are primarily supported by low fleet growth for crude oil tankers and long-haul trades for oil product tankers.
High volatility in freight rates can be expected in the coming half year half a year, when it may also be prudent to look at the time charter market, where one- and three-year time charter rates are both at their highest level since 2009. At USD 48,000 per day and USD 43,500 per day, time charters will make positive returns after all costs inclusive of capital cost and depreciations are deducted.
In the longer run, an eventual repeal of the US crude oil export ban will likely have some impact on the tanker trading lanes. The US congress is set to vote on the issues during this autumn. For the supporters the case is clear: US refineries are saturated with light sweet crude which is produced abundantly. For those in favour of keeping the crude oil export ban still in place there is “national interest”, which currently seems to hold the upper hand. Currently, the only crude oil exports today go to Canada (0.5mb/d).
Moreover, the eventual lifting of international sanctions on Iran is likely to see a steady increase in crude oil, both sweet and sour, into the market over the coming one to three years, depending on much-needed investments to boost production and time to regain market shares. BIMCO expects the re-entry of Iranian crude oil into the market will change trade patterns as other suppliers will be squeezed on their market share. The key will be West African produced sweet crude now going to Europe and East Asia. The latter is the vital one and a stronghold behind the current upturn. The overall impact on the tanker earnings from these changes holds the potential to become both negative and positive.
Source: BIMCO | Hellenic Shipping News
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Wednesday, 30 September 15
Q1'16 FOB INDONESIA COAL SWAP FALLS $1.25 A TON AS SLIDE CONTINUES
COALspot.com: Indonesian coal swap for delivery Q4 2015 declined month on month and week over week.
The Q4 swap declined $ 0.72 (-1.78%) per t ...
Wednesday, 30 September 15
NEW BUILDING MARKET INSIGHT
COALspot.com: This year has been, beyond any doubt, a rather strenuous one for the newbuilding market. Ordering activity with regards to Dry Bulker ...
Tuesday, 29 September 15
FOB RICHARDS BAY COAL SWAPS ARE SLIDING
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q4' 2015 declined week over week and month over month.
The Q4 swap was down US$ ...
Monday, 28 September 15
API 5 FOB NEWCASTLE COAL SWAPS UP $2.15 IN ONE MONTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2015 delivery increased $2.10 per ton (5.15%) month over month to US$ 42.93 per ton. The ...
Monday, 28 September 15
CAPESIZE FLEET INCREASES BY JUST 1 VESSEL DURING LAST 12 MONTHS, IN POSITIVE SIGN FOR DRY BULK SHIPPING MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
After a rather tumultuous period, the shipping industry and more particular the dry bulk market has started to adjust to the new realities of globa ...
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- Edison Trading Spa - Italy
- Neyveli Lignite Corporation Ltd, - India
- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
- Bulk Trading Sa - Switzerland
- Eastern Coal Council - USA
- Orica Australia Pty. Ltd.
- Bharathi Cement Corporation - India
- Standard Chartered Bank - UAE
- Africa Commodities Group - South Africa
- Kumho Petrochemical, South Korea
- Bukit Makmur.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Deloitte Consulting - India
- Kartika Selabumi Mining - Indonesia
- Australian Coal Association
- SN Aboitiz Power Inc, Philippines
- Global Business Power Corporation, Philippines
- Carbofer General Trading SA - India
- Directorate General of MIneral and Coal - Indonesia
- Indika Energy - Indonesia
- Port Waratah Coal Services - Australia
- PNOC Exploration Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Tata Chemicals Ltd - India
- Interocean Group of Companies - India
- Intertek Mineral Services - Indonesia
- Savvy Resources Ltd - HongKong
- LBH Netherlands Bv - Netherlands
- Star Paper Mills Limited - India
- Banpu Public Company Limited - Thailand
- Billiton Holdings Pty Ltd - Australia
- Renaissance Capital - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dalmia Cement Bharat India
- Madhucon Powers Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Indonesian Coal Mining Association
- Price Waterhouse Coopers - Russia
- Parliament of New Zealand
- Formosa Plastics Group - Taiwan
- Energy Link Ltd, New Zealand
- European Bulk Services B.V. - Netherlands
- OPG Power Generation Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Gujarat Sidhee Cement - India
- Romanian Commodities Exchange
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
- Sindya Power Generating Company Private Ltd
- Heidelberg Cement - Germany
- Larsen & Toubro Limited - India
- International Coal Ventures Pvt Ltd - India
- ICICI Bank Limited - India
- Therma Luzon, Inc, Philippines
- Australian Commodity Traders Exchange
- ASAPP Information Group - India
- Orica Mining Services - Indonesia
- Ministry of Finance - Indonesia
- Iligan Light & Power Inc, Philippines
- Ind-Barath Power Infra Limited - India
- GVK Power & Infra Limited - India
- IHS Mccloskey Coal Group - USA
- White Energy Company Limited
- AsiaOL BioFuels Corp., Philippines
- Videocon Industries ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chamber of Mines of South Africa
- MS Steel International - UAE
- CIMB Investment Bank - Malaysia
- Bayan Resources Tbk. - Indonesia
- Electricity Authority, New Zealand
- Parry Sugars Refinery, India
- GAC Shipping (India) Pvt Ltd
- Indian Oil Corporation Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The State Trading Corporation of India Ltd
- Bhoruka Overseas - Indonesia
- TeaM Sual Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- PowerSource Philippines DevCo
- Bangladesh Power Developement Board
- Pipit Mutiara Jaya. PT, Indonesia
- Latin American Coal - Colombia
- Indogreen Group - Indonesia
- Georgia Ports Authority, United States
- Central Java Power - Indonesia
- Sojitz Corporation - Japan
- Sree Jayajothi Cements Limited - India
- Kaltim Prima Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- India Bulls Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Grasim Industreis Ltd - India
- Directorate Of Revenue Intelligence - India
- The University of Queensland
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Sarangani Energy Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Trasteel International SA, Italy
- PTC India Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Coalindo Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Bhatia International Limited - India
- Posco Energy - South Korea
- Mercuria Energy - Indonesia
- Independent Power Producers Association of India
- SMC Global Power, Philippines
- Meralco Power Generation, Philippines
- Wood Mackenzie - Singapore
- Baramulti Group, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kobexindo Tractors - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Chettinad Cement Corporation Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Commonwealth Bank - Australia
- London Commodity Brokers - England
- Energy Development Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Samtan Co., Ltd - South Korea
- Oldendorff Carriers - Singapore
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Planning Commission, India
- Lanco Infratech Ltd - India
- Agrawal Coal Company - India
- Power Finance Corporation Ltd., India
- Mintek Dendrill Indonesia
- Thiess Contractors Indonesia
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining Corp, Philippines
- Sical Logistics Limited - India
- Karaikal Port Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Salva Resources Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Xindia Steels Limited - India
- Electricity Generating Authority of Thailand
- Minerals Council of Australia
- VISA Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Anglo American - United Kingdom
- Binh Thuan Hamico - Vietnam
- Central Electricity Authority - India
- Goldman Sachs - Singapore
- Krishnapatnam Port Company Ltd. - India
- Bukit Baiduri Energy - Indonesia
- Thai Mozambique Logistica
- Coal and Oil Company - UAE
- Indian Energy Exchange, India
- IEA Clean Coal Centre - UK
- Ministry of Transport, Egypt
- Miang Besar Coal Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Altura Mining Limited, Indonesia
- Tamil Nadu electricity Board
- Simpson Spence & Young - Indonesia
- Mjunction Services Limited - India
- GMR Energy Limited - India
- Siam City Cement - Thailand
- Jindal Steel & Power Ltd - India
- Global Coal Blending Company Limited - Australia
- Ministry of Mines - Canada
- Manunggal Multi Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Borneo Indobara - Indonesia
- Attock Cement Pakistan Limited
- Meenaskhi Energy Private Limited - India
- Essar Steel Hazira Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- Vedanta Resources Plc - India
- Wilmar Investment Holdings
- Indo Tambangraya Megah - Indonesia
- Coastal Gujarat Power Limited - India
- Riau Bara Harum - Indonesia
- McConnell Dowell - Australia
- Merrill Lynch Commodities Europe
- CNBM International Corporation - China
- Vijayanagar Sugar Pvt Ltd - India
- Marubeni Corporation - India
- Rio Tinto Coal - Australia
- Cement Manufacturers Association - India
- Aditya Birla Group - India
- Mercator Lines Limited - India
- Ambuja Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Maheswari Brothers Coal Limited - India
- Global Green Power PLC Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Barasentosa Lestari - Indonesia
- Siam City Cement PLC, Thailand
- Petron Corporation, Philippines
- SMG Consultants - Indonesia
- Pendopo Energi Batubara - Indonesia
- The Treasury - Australian Government
- Kalimantan Lumbung Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- New Zealand Coal & Carbon
- Asmin Koalindo Tuhup - Indonesia
- Medco Energi Mining Internasional
- Economic Council, Georgia
- Jaiprakash Power Ventures ltd
- Leighton Contractors Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Singapore Mercantile Exchange
- Malabar Cements Ltd - India
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